ECB in focus
Thursday 21 July 2022
No surprises as to what the markets are clinging onto today as we get the latest ECB rate and policy decision plus presser at the slightly later times of 13.15 BST and 13.45 BST with policy statement published at 15.00 BST. Jury still out and it remains a very close call between 0.25-0.5% for the ECB’s first rate hike since 2011 today. Given the Italian government disarray and EU recession threat (not to mention past dovish disappointments) they may still err on the side of caution. As for the new anti-fragmentation tool it will take a lot for the ECB to actually activate one but let's see if they offer any clues. Breaking news: Draghi definitely gone this time.
Bank of Japan left rates and policy unchanged as expected with Governor Kuroda saying a large rate hike would be needed to stop JPY weakness but that would bring substantial damage to Japanse economy. All helping to underpin USDJPY still.
Still seeing some good two-way FX business though but now with equities falling again as are oil and gold and we're seeing some risk-off JPY and CHF demand return.
GBPUSD: Failure around 1.2000 since yesterday's retreat to test 1.1950-60 and now a break below to post 1.1921 helped by some EURGBP demand and GBPJPY supply again.EURGBP: Underpinned at 0.8480-85 again in the extended retreat yesterday but failure at 0.8540 once more so far.GBPJPY: Now finding at base at 165.25 after capping at 166.00 as the JPY/risk jury remains out.
EURUSD: Underpinned at 1.0160 for the moment after a decent cap at 1.0240 as we wait on the ECB. NS1 gas flow back on this morning but still a fragile EU landscape.USDJPY: Holding 137.90-00 and now up through the 138.40 resistance/offers to post 138.68 highs. EURJPY: Support around 140.80-00 now but sellers poised still whenever risk turns. ECB in focus.USDCHF:Support now at 0.9700 amid some firmer USD tones and EURUSD retreat but capping around 0.9740 as EURCHF retreats too.EURCHF: Holding 0.9870 amid some SNB support still but sellers prevailing at 0.9940 and now in retreat again. ECB in focus.
AUDUSD: A good cap at 0.6920 and now testing 0.6860 amid firmer USD/softer risk tones. GBPAUD holding 1.7350 again in latest retreat but tightly bound. NZDUSD capping at 0.6240 this time and now back down through 0.6200-20 amid firmer USD/softer risk tones returning. GBPNZD holding 1.9200 this time. USDCAD: A solid base at 1.2860 this time amid firmer USD/softer oil tones and now back up through 1.2900. I expect some good two-way business still overall amid the variable risk and USD tones.
Let's continue to be careful out there.
Interbank rates: 08.55 BST